Global Digital Commerce to Reach $8 Trillion by 2020
New Research Suggests Digital Spending to Increase by 60% in the Next Four Years
Recent research findings yield a positive prognosis for the online payments industry in general and ecommerce merchants specifically.
According to new data published in April, 2016 by Juniper Research, merchants can expect to see global digital spending reach the $8 trillion mark by the year 2020. This represents more than a 60% increase over the 2015 total ($4.9 trillion).
Ecommerce Sales Driving Growth
The report suggests that the tremendous growth projected for digital commerce is expected to come from three key sectors in particular:
- Digital Banking
- Remote Digital Goods
- Remote Physical Goods
These projections remain consistent with currently observed trends in ecommerce, all of which suggest online retail will continue growing at an unprecedented rate.
Official figures released by the US Census Department in February, 2016 showed a 14.6% growth in domestic online retail in 2015, accounting for more than half of total retail sales growth. Not surprisingly, the strongest quarter for ecommerce merchants was Q4, and the researchers noted particular spikes around national shopping events during that period.
In the US, Cyber Monday registered a total of $3.19 billion in digital sales. During the corresponding Chinese event, Singles Day, consumers spent a massive $14.3 billion at retail giant Alibaba alone.
The data also suggests that transaction volume will continue to increase as goods in digital formats, such as movies and ebooks, become more standard. Researchers already observed noteworthy growth resulting from the widespread adoption of subscription streaming services like Netflix, Hulu and Spotify.
Mobile Commerce Playing an Integral Role
Author of the Juniper Research study, Lauren Foye, suggests that the team’s data clearly shows a more widespread adoption of mobile devices in ecommerce.
“The digital commerce market as a whole is seeing an ever increasing propensity towards an omni-channel approach,” Foye explained, referring to the popular concept of a seamlessly-integrated, multi-platform customer experience.
Foye continued, “This extends to eCommerce, where the mobile and tablet platform is seeing increased use towards the purchasing of physical goods, either for delivery or collection.”
Indeed, mobile is the platform on which ecommerce merchants around the world see the most rapid development. In fact, UK retailers actually saw mobile sales overtake desktop and laptop sales for the first time during the 2015 holiday season.
Mobile devices, such as smartphones and tablets, will play a pivotal role in the omni-channel revolution—a blurring of the lines between the brick-and-mortar and ecommerce environments. As the study suggests, in-store transactions utilizing mobile-based near field communication technology are expected to increase by more than 400% between 2016 and 2020. At the same time, the use of online checkouts for popular brick-and-mortar services like food takeout continues to rise.
Digital Banking & Money Transfer to Overtake Digital Retail
Despite the boom for online retailers, banking and money transfers were the sectors where the study anticipated seeing the greatest growth.
We can expect to find the number of transactions involving mobile and online money transfers to surpass the number of transactions involving remote physical goods by the end of this year. Analysts attribute this growth in online money transfers to multiple factors.
As Foye explained, “Global online banking users as a proportion of banked individuals are forecast to cross the 50 percent mark in 2016.” Although the number of adults in the US who bank online surpassed 50% back in 2013, by next year, the same trend should apply globally.
Another major source of this increase is expected to come from the interpersonal movement of money, such as international remittances or in the form of gifts. As an example, communication app WeChat reported more than 8 billion P2P transactions during the week surrounding Chinese New Year in February.
The Age of Convenience
All of the data suggests that merchants can expect astronomical growth for ecommerce on all three fronts: banking, payments and retail. That means the industry must be ready to adapt to this new “Age of Convenience”—a time when consumers turn to the internet not just to shop at their own pace, but to conduct business in the manner they choose.
Consumers are ready to take advantage of the new opportunities made available to facilitate ecommerce transactions. As a result, merchants and other providers stand to benefit highly in the next few years, but only if they are able to effectively leverage the ecommerce tools at their disposal.
Last Update: May 11, 2016
Tell us how can we improve this post?
Are you interested in a topic we haven’t covered yet? Use our Submit a Question feature to request additional information from our contributing experts.